The stock has been under pressure for some time amid increasing investor worry that the company has no clear candidate in its development pipeline to replicate the blockbuster's financial success.

(Bloomberg)—AbbVie has long said that its blockbuster drug Humira is protected by a fortress of patents. But on Friday, investors got a first look at what could happen when those walls are breached.

The drugmaker said fourth-quarter sales of Humira dropped 17.5 percent overseas as the inflammation treatment faced competition from biosimilars in Europe for the first time. In the U.S., where the drug is still shielded from lower-priced competitors until 2023, its sales rose 9.1 percent.

Shares of AbbVie were down 6.2 percent this morning. The stock has been under pressure for some time amid increasing investor worry that AbbVie has no clear candidate in its development pipeline to replicate Humira’s financial success. Humira is the world’s top-selling medication, and it accounts for roughly two-thirds of AbbVie’s revenue.

On a conference call with analysts, AbbVie executives said they expect to lose almost $2.5 billion in Humira sales this year due to the new competition in Europe. However, they also said they expect the drug to continue to power growth in AbbVie’s profits.

“The underlying business despite taking almost a $2.5 billion hit is growing at 6 percent or 7 percent from an EPS standpoint,” said CEO Richard Gonzalez. “If you adjusted for the $2.5 billion, the bottom line’s growing at 23 percent. There aren’t many businesses around here that have that kind of performance.”

Despite speculation that AbbVie could buy another company in order to restock its pipeline—including a potential bid for Bristol-Myers Squibb, which itself has proposed a $74 billion takeover of Celgene—Gonzalez said on the call that the company isn’t looking at a tie-up with another large drug company.
“Merger-type deals,” said Gonzalez, “we’re not contemplating anything of that magnitude at all.”

Some previous deals by AbbVie haven’t provided their hoped-for payoffs. Earlier this year, the company said it would take a $4 billion charge on its $5.8 billion takeover of Stemcentrx, and that it could write down an additional $1 billion. The drug acquired in that 2016 deal, an experimental lung-cancer therapy called Rova-T, failed to live up to expectations. AbbVie stopped enrolling patients in a late-stage trial of the therapy in December.

Humira still has a significant window in the U.S., its biggest market, before it will face any competition from lower-priced versions known as biosimilars. On Friday, AbbVie said it had reached a settlement with Coherus BioSciences on global, nonexclusive licensing rights for a Humira biosimilar that won’t be sold in the U.S. until December 2023. Coherus will pay royalties to AbbVie, according to a statement.

The Humira shortfall in Europe left a dent in the company’s overall results. AbbVie’s total fourth-quarter revenue was $8.31 billion, missing estimates of $8.38 billion. Sales were up 7.3 percent in year-over-year terms.

Gonzales told investors that the near-term launches of “four major products that have multibillion-dollar potential” will offset and absorb the biosimilar impact on Humira sales.

One bright spot for the company was its hepatitis C franchise, which brought in $862 million globally compared with analysts’ estimates of $801 million. Mavyret, approved last year, has carved into demand for rival Gilead Sciences Inc.’s suite of similar therapies.